Financial Service Investigations: Know Your Customer

Running a financial service is profitable and promising. Its security is high since financial services, as long as commerce exists, will be in demand. With an extensive pool of customers, your financial service can transcend borders. This is mainly in the modern interconnected global business arena.  While the potential is promising, your undertakings can take an undesirable turn should you be caught on the wrong side of the law. Among the concepts that demand due diligence in the industry is the KYC (know your customer) aspect. With financial services investigations, you can ensure that every client that comes knocking doesn’t get in unless they are who they claim to be and won’t jeopardize your business.

KYC entails verifying the identity of a financial service user. Verifying the credentials isn’t only for business. It is a regulatory aspect, too. The law requires that you ascertain the identity and other information of a client. In most states, it is a mandatory process. It is put in place to regulate various concerns. Financial services investigation helps in many ways, among the top including;

Money laundering

Money laundering is a menace as it threatens the core values of economic progress, not to mention security and social concerns. Money laundering undermines the financial markets’ integrity. This could lead to loss of economic policy controls, causing instability. Without practical measures, this could ruin the economic landscape. KYC helps to mitigate money laundering through financial services, maintaining the needed balance.


Fraudulent transactions can ruin an economy. Stealing from unsuspecting people, evading taxes, and other fraudulent tactics usually happen as someone hides under a false identity. Through financial services investigations, your business ensures that it transacts with credible customers. This means that all their activities can be traced back to them, and should they engage in fraud, held responsible. Cases of ruined business through fraud, funds lost without a trace, high corruption cases in business and public institutions have always been significant pain. With financial investigations, they can be limited since it is easier to trace and hold the culprits responsible.

Social vices

Financing terrorism, facilitating drug dealing activities, corrupting public officials, and other social vices can be limited through financial investigations. Illegal arms dealers, for instance, can’t transact through your financial service if you refuse their business. This derails their progress. Drug dealers won’t scale their criminal enterprises with ease. Corrupting public officials is also less likely, as they don’t have the means to use the accumulated wealth without getting caught. All such anti-social considerations are easier to track and stop through financial investigations.

Risk assessment

While running a financial service, risk assessment is arguably the most obvious reason to consider investigations. You don’t want to give out loans to ghosts who’ll run with your money without a trace. You also want to ensure that your investments are safe. This means lending amounts in line with a borrower’s capacities. By identifying financial history and assets owned, a service can establish the risk associated with a client. This translates to less uncertainty, allowing your business to lend more, improve profits, and help the economy grow.

Financial services investigations deliver many more benefits. As you go beyond borders, it can be a lot more challenging. This is noting that the documents and processes might differ since regulations aren’t the same around the world. Locally, it might be easier.  Documents including social security number, driver’s license, and passport could be enough. For proof of residence, you can use;

  • Employment documents
  • Bank statement
  • Utility bills, among others

But, how do you conduct a financial investigation when working abroad? The resources and skills needed could be overwhelming. Nonetheless, this shouldn’t force your hand, especially with the available agencies.

Enlisting a service to handle the KYC function comes in handy in many ways. For instance, due to the economies of scale, it’ll be a lot more cost-effective. It won’t cost as much as recruiting and maintaining an in-house team. Moreover, the agencies are more effective. They have the resources and experience needed to operate beyond borders. A financial services investigation provider makes the process more manageable. This ensures that your business adheres to the laws and mitigates risks as you strive to build a bigger and better venture.

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